World Bank Projects A Disastrous Decline in Pakistan’s Cotton Output for FY2021

The World Bank (WB) has projected a decline of around 34 percent in Pakistan’s production of cotton and has estimated 8.9 million bales for 2020-21, as compared to 13.2 million bales in 2019-20.

The WB stated in its latest report ‘Commodity Markets Outlook’ that the global production of cotton is projected to fall eight percent this season, led by a decline in the US, India, and Pakistan, and mostly due to reduced plantings.

The prices of cotton are expected to average 23 percent higher in 2021, as compared to 2020, followed by a small increase in 2022. The prices had surged by 16 percent in the first quarter of 2021, following a strong gain in Q4 2020.

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Although the prices retreated in April 2021, they are still 40 percent higher than their trough in April 2020. The overall price strength reflects upward revisions to the outlook for global consumption that is expected to average 24.5 mmt in the current season, which is almost eight percent higher than 2019-2020, it added.

The WB has projected Pakistan’s cotton import at 11.03 million bales for 2020-21, as compared to 5.55 million bales in 2019-20; and has projected Pakistan’s wheat production at 25.2 million metric tons for 2020-21, as compared to 24.3 million metric tons.

It has projected Pakistan’s sugar production at 6 million metric tons for 2020-21, as compared to 5.3 million metric tons in 2019-20. Sugar stocks have been projected at 1.4 million metric tons for 2020-21, and the same had been estimated for 2019-20.

Pakistan’s production of rice is projected to be at 7.6 million metric tons for 2020-21, as compared to 7.2 million metric tons. Its export has been projected at 4.1 million metric tons in 2020-21, as compared to 3.8 million metric tons in 2019-20.

Additionally, the report has projected fertilizers production at 2,973,000 tons for 2020-21, as compared to 2,978,000 tons in 2019-20. Furthermore, the consumption of fertilizers has been estimated at 3,267,000 tons for 2020-21, as compared to 3,435,000 tons in 2019-20.

The report noted that the prices of commodities continued to recover in the first quarter of 2021, and are expected to remain close to the current levels throughout the year, lifted by the global economic rebound and improved growth prospects.

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However, the outlook is heavily dependent on the progress on containing the pandemic, policy support measures in advanced economies, and the production decisions by the major commodity producers.

Energy prices are expected to average more than one-third higher this year than in 2020, with oil averaging $56 a barrel. Metal prices are expected to climb 30 percent, and agricultural prices are forecast to rise by almost 14 percent.

Almost all the commodity prices are now above the pre-pandemic levels, driven by the upsurge in economic activity, as well as some specific supply factors, particularly for oil, copper, and some food commodities, it added.